In this context, having a rigorous and updated reading of country risk, both in the short and medium term, has become an essential prerequisite for any strategic decision. This is the ambition of the G-Grade, a country risk study conducted by AU Group, a broker specializing in credit insurance and political risks, whose latest edition (second quarter of 2026) covers more than 140 countries.

The broker reveals its main findings on a selection of countries, comparing ratings between the fourth quarter of 2025 and the second quarter of 2026.

Over the past ten years, the G-Grade has established itself as a benchmark tool for finance departments and credit managers: originally designed as a 'grade of grades', it aggregates the positions of the leading credit insurers (Allianz Trade, Atradius, Coface, Credendo) to provide a synthetic quarterly view of country risk.

However, in an unprecedented geopolitical context, this reading - essentially short-term and focused on commercial credit risk linked to a country's economic and political situation - is no longer sufficient. Companies exporting and investing abroad require a more granular, forward-looking vision. They need a compass capable of detecting risks that, while they may not immediately materialize as payment defaults, can threaten their assets, production facilities, or operational continuity.

It is with this logic in mind that AU Group has structurally evolved the G-Grade. Two new dimensions have now been added to the short-term credit rating: a sovereign risk rating (systematically adopting the most unfavorable position among S&P, Moody's, and Fitch to assess a state's ability to honor its financial commitments over time) and a Terrorism & Political Violence (PVT) rating, developed in partnership with Pangea Risk. The latter evaluates two complementary dimensions: political insecurity in the broad sense (wars, terrorism) and exposure to strikes, riots, and civil commotion (notably SRCC and War).

This analytical triptych addresses a structural reality: PVT risks are no longer the preserve of specific zones. Phenomena once perceived as peripheral, such as political violence and civil instability, are now affecting economies long considered stable. The short-term view must therefore be complemented by a medium-term approach, which alone can inform decisions regarding market entry, investment, or the management of B2B credit in a durably disrupted environment.

Middle East: Historic downgrades with global repercussions

The most significant variations this quarter are concentrated in the Middle East, where the ongoing conflict and risks weighing on the Strait of Hormuz are resulting in downgrades of a magnitude rarely seen in the G-Grade's history, particularly regarding short-term ratings.

Kuwait recorded the most marked variation: +1.25 points (from 3.75 in Q4 2025 to 5 in Q2 2026). Qatar saw its risk increase by 1 point, the United Arab Emirates by 0.75 points (with a rating that remains solid at 3.25), and Bahrain by 0.50 points, for a rating now at 7.50, reflecting significantly higher vulnerability.

These adjustments reflect a repositioning by credit insurers, who are now integrating the expected medium- and long-term impacts on these economies. The interconnection of these markets with major global economies gives these movements systemic reach: rising energy prices, supply chain disruptions, inflationary pressures, and a collapse in investor confidence. Faced with a conflict that is becoming entrenched, insurers are raising their insolvency forecasts for 2026. Energy-intensive sectors (base metals, chemicals) as well as consumer goods, real estate, and technology appear particularly exposed. In the absence of clear prospects for conflict resolution, the risk of a major financial crisis can no longer be ruled out.

Europe: Persistent fragilities and positive integration dynamics

Europe is not immune to current economic shocks. Rising energy prices, amplified by tensions in the Middle East, are primarily weakening the aforementioned energy-intensive sectors. Rising interest rates and persistent inflation are simultaneously weighing on household consumption, corporate investment, and the public finances of already indebted states, creating fertile ground for worsening corporate insolvencies.

In this mixed picture, Cyprus stands out with a notable improvement: its short-term G-Grade rating moved from 3.5 to 2.5, indicating a decrease in credit risk. The island boasts solid macroeconomic fundamentals with growth above the European average, unemployment at its lowest since the financial crisis (4.1% in 2025), a budget surplus, and public debt reduced to 62% of GDP. Other improvements: tourism, which accounts for approximately 14% of GDP, is breaking records, while foreign investment in construction exceeds 8 billion euros.

Croatia, meanwhile, continues its upward trajectory, driven by the lasting effects of its European integration. Since adopting the euro and joining the Schengen Area in 2023, European funds have supported infrastructure modernization and boosted economic activity. The country's attractiveness to investors is strengthening, and corporate insolvencies have declined - a tangible sign of a positive dynamic taking root for the long term.